Used nationwide to prevent people of color from purchasing homes in white communities.
What is a racially restricted covenant?
A covenant is a legally enforceable “contract” imposed in a deed upon the buyer of property. Owners who violate the terms of the covenant risk forfeiting the property. Most covenants “run with the land” and are legally enforceable on future buyers of the property.
Racially restrictive covenants refer to contractual agreements that prohibit the purchase, lease, or occupation of a piece of property by a particular group of people, usually African Americans. Racially restrictive covenants were not only mutual agreements between property owners in a neighborhood not to sell to certain people, but were also agreements enforced through the cooperation of real estate boards and neighborhood associations. Racially restrictive covenants became common after 1926 after the U.S. Supreme Court decision, Corrigan v. Buckley, which validated their use.
How did racial covenants originate?
The practice of private, racially restrictive covenants evolved as a reaction to the Great Migration of Southern blacks and in response to the 1917 Court ruling (see Buchanan v. Warley) which declared municipally mandated racial zoning unconstitutional. Buchanan dealt only with legal statutes, thus leaving the door open for private agreements, such as restrictive covenants, to continue to perpetuate residential segregation.
A typical covenant included the following:
“…hereafter no part of said property or any portion thereof shall be…occupied by ay person not of the Caucasian race, it being intended hereby to restrict the use of said property…against occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian race.”
The practice of using racial covenants became so socially acceptable that in “1937 a leading magazine of nationwide circulation awarded 10 communities a ‘shield of honor’ for an umbrella of restrictions against the ‘wrong kind of people’.1 The practice was so widespread that by 1940, 80% of property in Chicago and Los Angeles carried restrictive covenants barring black families.2
1934–1968: FHA Mortgage Insurance Requirements Utilize Redlining
Race and ethnicity are used to determine mortgage eligibility in communities such as Roxbury, Dorchester and Hyde Park, thus perpetuating housing segregation.
The Federal Housing Administration (FHA) Institutionalizes Racism
Through an overt practice of denying mortgages based upon race and ethnicity, the FHA played a significant role in the legalization and institutionalization of racism and segregation. The Underwriting Manual established the FHA’s mortgage lending requirements, ultimately institutionalizing racism and segregation within the housing industry. The following presents information about the national context of redlining and is not specific to Greater Boston.
The FHA was instrumental in alleviating the home ownership crisis. However, despite it’s positive impact, the FHA also had significant negative effects. FHA insurance often was isolated to new residential developments on the edges of metropolitan areas that were considered safer investments, not to inner city neighborhoods. This stripped the inner city of many of their middle class inhabitants, thus hastening the decay of inner city neighborhoods. Loans for the repair of existing structures were small and for short duration, which meant that families could more easily purchase a new home than modernize an old one, leading to the abandonment of many older inner city properties.
The FHA also explicitly practiced a policy of “redlining” when determining which neighborhoods to approve mortgages in. Redlining is the practice of denying or limiting financial services to certain neighborhoods based on racial or ethnic composition without regard to the residents’ qualifications or creditworthiness. The term “redlining” refers to the practice of using a red line on a map to delineate the area where financial institutions would not invest (see residential security maps).
The FHA allowed personal and agency bias in favor of all white suburban subdivisions to affect the kinds of loans it guaranteed, as applicants in these subdivisions were generally considered better credit risks. In fact, according to James Loewen in his 2006 book Sundown Towns, FHA publications implied that different races should not share neighborhoods, and repeatedly listed neighborhood characteristics like “inharmonious racial or nationality groups” alongside such noxious disseminates as “smoke, odors, and fog.” One example of the harm done by the FHA is as follows:
In the late 1930’s, as Detroit grew outward, white families began to settle near a black enclave adjacent to Eight Mile Road. By 1940, the blacks were surrounded, but neither they nor the whites could get FHA insurance because of the proximity of an inharmonious racial group. So, in 1941, an enterprising white developer built a concrete wall between the white and black areas. The FHA appraisers then took another look and approved the mortgages on the white properties.
As a result of continued use of racially restrictive covenants and “steering” of black residents to non-white neighborhoods by real estate agents, access for minorities to purchase homes remained severely limited. It was not until 1968 that the actual inclusion of racially-restrictive covenants into deeds was deemed illegal, although many such covenants can still be found within the language of deeds today. While no longer a legally sanctioned practice, the residential patterns created by racially restrictive covenants still persist.